Icelandic
marine fishery landings account for 2.1 per cent of the world’s
catches, making Iceland the 12-largest fishing nation worldwide. Domestically
the industry is important, being the second most important industry
and employing approximately four per cent of the population. The Icelandic
fishing grounds are very productive, yielding large amounts of redfish,
herring, cod and capelin. The most important species landed into Iceland,
both in terms of value and volume are cod, redfish and haddock. Atlantic
salmon is an important species for recreational fishing, more so than
commercially. While less important than the capture industry, aquaculture
is a growing industry, with production dominated by Atlantic Salmon
and Arctic Charr. Iceland is the world’s largest producer of
farmed charr.

GENERAL
AIMS AND OBJECTIVES

The
primary fisheries management objective, detailed in the 1990 Fisheries
Management Act, is to promote the conservation and efficient utilisation
of marine stocks with a view to ensuring stable employment and settlement.
In meeting this objective, the authorities stress the importance of
scientific research into fisheries biology and the population dynamics.

The
government is a proponent of free trade in fish and fish products
both domestically and internationally, together with the elimination
of government subsidies that encourage the over-utilisation of living
marine resources and lead to environmental damage. The Ministry of
Fisheries opposes the use of market access restrictions as a tool
for influencing utilisation of marine resources.

The
government supports the use of selective fishing gear and good practice
to minimize negative impacts on fish stocks or the wider environment.
Discards are prohibited and a surveillance programme is in place.
The Ministry of Fisheries also aims at applying sustainable methods
and use of the natural marine resources in international waters.

FISHERIES
SECTOR METHODS

TACs,
quotas and ITQs

The
exploitation of commercially important marine fish species is regulated
under a system of tradable catch-quotas allocated to individual vessels
(ITQs, Individual Transferable Quotas). These quotas assign a right
to catch a specific proportion of the annual TAC of a specific species
each year. The quotas can be bought and sold freely.

TAC
levels are decided at the end of each fishing year, after a stock
assessment has taken place. The fishing year runs from 1 September
until 31 August the following year. The Marine Research Institute
carries out stock assessments. These are presented to the International
Council for the Exploration of the Sea (ICES) for review before being
issued as formal recommendations to the Icelandic government.

In
1975 Iceland applied Individual Quotas (IQs) to the herring fishery.
In 1979 these were made transferable, so developing into the ITQ system
present. An ITQ represents shares in the TAC and is allocated to fishing
vessels. ITQs apply to all species that are managed by TACs and represent
harvest rights. The harvest rights granted are not rights to ownership
and do not represent jurisdiction of the resource. ITQs are permanent,
divisible and relatively transferable. They can be bought and sold
with vessels, or retained with the owner if a new or newly bought
vessel of similar size and capacity is introduced to the fleet. If
the catch of a vessel amounts to less than 50 per cent of the allocated
quota for two fishing years running, the quota will be removed and
shared amongst other vessels. Because it is possible to trade quotas,
there has been an increased specialisation in the Icelandic fleet.

Two
major measures are applied in order to prevent a company or a few
companies from dominating the fishing industry through owning most
or all of the fishing rights. There are upper limits on the percentage
share of major species that can be held by a fishing company or group
of companies closely linked by ownership, eg the limit for cod is
12 per cent. The second measure prohibits a company from holding more
than 12 per cent of the value of the combined shares for all species
with TACs.

In
2001 new legislation was introduced to include small vessels, which
includes the majority of the hook-and-line boats, in the TAC system.
This applies to vessels smaller than 6 tonnes. These vessels are now
included in the ITQ system. However, restrictions apply on transferring
from this group to larger vessels. In the same year three additional
species, tusk, ling and monkfish, were included in the quota system.

Closures

Area
closures are a commonly employed management tool. Cod spawning areas
are closed for several weeks in late winter and extensive nursery
grounds are permanently closed for fishing. Fishing with vessels over
42 metres long is prohibited within 12 nautical miles of most of the
coast, and all forms of trawling is prohibited in nursery or spawning
areas near the coast. There are however few exceptions including small
islands and areas where the 12 nautical mile limit is drawn from cliffs.
Smaller trawlers have access to some of these areas. In addition to
such permanent measures, the Directorate of Fisheries, together with
the Marine Research Institute, may temporarily close areas where there
are a large number of juveniles at short notice.

Gear restrictions

Gear
restrictions are used to prevent the harvesting of undersized or juvenile
fish and to minimize by-catch. One of the most commonly used restrictions
is minimum mesh size. Sorting grids are also mandatory in the shrimp
and groundfish fishery.

Levies
and taxes

Taxes
and levies are payable by the industry to the government. This includes
a fishing inspection fee and quota transfer fees when trading ITQs.
An additional chapter to The Fisheries Act (No. 38, 15 May 1990) adopted
in 2002 introduced a levy on fishing rights allocation for Icelandic
vessels, also called a resource fee, operating both in and outside
the EEZ. The levy is payable by fishing companies from the 1 September
2004 onwards. The resource fee is levied on gross profit, based on
the EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)
system. The fee is based on the total value of landings minus labour
costs, fuel costs, and other operating costs. Initially the tax is
set at six per cent, but will rise to 9.5 per cent after seven years.

Permits

All
vessels are required to hold a commercial fishing permit regardless
of what fish species they are targeting. A permit can only be obtained
if the vessel is included in the Vessels Registry with the Directorate
of Shipping and has been proven seaworthy.

Management
plans and harvest control rules

A
number of stocks, including cod and capelin, are managed under long-term
management plans. These take the form of harvest control rules (HCR),
which set maximum and minimum limits on catches with respect to the
previous year.

In
2000 the HCR for cod was revised. The rule states that the annual
quota should not exceed 25% of the fishable stock and that changes
in the annual total cod catch should not exceed 30,000 tonnes from
one year to the next. A committee meeting on the Harvest Catch Rule
(HCR) in April 2004 suggested that the rule succeeded, but the performance
could be enhanced if the limit for annual change of the cod quota
should be decreased to 22 per cent.

MARICULTURE

The
development of the sea farming industry is regulated with a view to
minimising the risk of diseases from farming installations infecting
wild salmon and the danger of interbreeding (genetic pollution) from
escapees. The fish farm locations and safety are also regulated. The
Marine Research Institute carries out research on locating aquaculture
systems and management of environmental impacts. Licensing and surveillance
of aquaculture facilities is the responsibility of two different agencies
depending on the species being reared. The Directorate of Freshwater
under the auspices of the Ministry of Agriculture supervises facilities
producing salmonids (not including sea cages) and other freshwater
species whereas the Directorate of Fisheries under the Ministry of
Fisheries oversees facilities producing marine species.

INLAND
AND RECREATIONAL FISHERIES

Fishing
rights in rivers and lakes are connected to the adjoining land. The
majority of the area where this is the case is agricultural land,
with fishing rights mostly privately owned by farmers. The holders
of fishing rights are by law required to form fishing associations.
They manage the fish stocks and usually rent or lease fishing rights
to angling associations or anglers. Stock assessments are based on
logbook entries. Logbooks are located in fishing lodges and it is
compulsory for recreational and commercial fishermen to complete them.

FISHERY
SECTOR INSTITUTIONS

The
Ministry of Fisheries is responsible for the management of fisheries
in Iceland. This includes the development and implementation of legislation
and annual decisions on TACs. The Ministry is supported by the Directorate
of Fisheries, the Marine Research Institute (MRI) and the Icelandic
Fisheries Laboratory (IFL).

The
Directorate is responsible for monitoring and inspecting vessels while
at sea, as well as landings. The Directorate also issues fishing permits
and allocates catch quotas. Landing data is submitted to the Directorate
on a daily basis, forming the basis of a near real-time overview of
quota uptake.

The
MRI undertakes research into the marine environment, including the
state of the stocks. In addition to its own research programmes, the
Institute works in collaboration with international organizations
such as ICES. This includes the TAC setting process in which ICES
reviews results and makes joint recommendations on TAC levels.

The
Marine Research Institute (MRI) currently concentrates mariculture
research on the farming potential for halibut, cod, turbot and abalone.
This includes the production of juveniles, selection of brood stock
and selective breeding in cooperation with private companies and research
institutions. The MRI also seeks to identify the most favourable,
areas for mariculture in terms of production and environmental impacts.

The
IFL aims to increase the value, quality and safety of marine catches
with research into development and dissemination of knowledge and
consulting. Their areas of research are mainly the processing and
aquaculture sector. The IFL also runs training courses for industry
and Universities.

The
Institute for Freshwater Fisheries carries out research into freshwater
fisheries and the freshwater environment, including stock assessments.
The Directorate for Freshwater Fisheries acts as an advisory council
to the Ministry for Agriculture. The Directorate’s areas of
competence lie in the enforcement of regulations concerning fishing
restrictions in inland waters (rivers and lakes) and the administration
and enforcement of the Salmonid Fisheries Act. The Directorate manages
licensing and regulatory enhancement, as well as fish culture activities,
including fish farming and salmon ranching.

The
Fisheries Association of Iceland represents the fishery sector’s
interests domestically and internationally. The areas of discussion
include environmental issues and responsible resource utilization.
The Fisheries Association is a member of the International Coalition
of Fisheries Associations (ICFA). The Association represents seven
main organizations in the fisheries sector, including both employers
and employees. The organizations include:

·
Employers:

·
Vessel owners

·
Processing plant organization

·
Employees:

·
Seaman’s organization

·
Enginists’ organization

·
Offices’ organization

·
Worker’s Union

·
Small boat owner’s organization

The
Fishery Association provides a mutual board for discussions for these
organizations and enables local and international coalitions and multi-cooperative
work.

GENERAL
LEGAL FRAMEWORKS

The
Icelandic fisheries management system is underpinned by the 1990 Fisheries
Management Act (No 38/1990). This defines the management objectives
as promoting the conservation and efficient utilisation of marine
stocks with a view to ensuring stable employment and settlement. Marine
fish stocks are stipulated as being the property of the Icelandic
nation.

The
legislation that currently relates to inshore fishing activities is
the Salmonid Fishing Act of 1970, which has been amended several times
since. A major provision of this Act prohibits salmon fishing at sea,
with minor exceptions.

INTERNATIONAL
COOPERATION AND AGREEMENTS

There
is limited access for foreign vessels to Icelandic waters. Where this
does occur, access is gained through bi- and multi-lateral agreements
and quota swaps. Agreements are administered by government bodies
and trading in quotas between foreign vessels and Icelandic fishing
vessels is prohibited.

Fishing
by Icelandic vessels in areas beyond Icelandic waters has been increasing
in recent years. These vessels nonetheless remain subjected to Icelandic
laws and regulations, including technical measures.

Iceland
became a signatory to the voluntary FAO Code of Conduct in 1995 and
ratified the UN Fish Stocks agreement in 1997.

Iceland
is a contracting party of NEAFC (North East Atlantic Fisheries Commission),
NAFO (Northeast Atlantic Fisheries Organisation), NASCO (North Atlantic
Salmon Conservation Organization) and the International Whaling Commission
(IWC). Vessels registered in foreign ports need to have Icelandic
fishing inspectors onboard when operating in Icelandic waters. This
applies to both vessels from the EU as well as fisheries under the
supervision of NAFO. Iceland is also a party to OSPAR (Oslo and Paris
Commissions for the Convention for the Protection of the Marine Environment
of the North-East Atlantic).

As
a number of the Icelandic stocks are straddling or migratory, Iceland
has many fishing agreements. These include bilateral agreements with
the European Union (EU) concerning the Icelandic redfish and capelin,
and also many agreements with Norway. Multilateral agreements include
arrangements with Norway, Greenland/Denmark, the Faeroe Islands and
Russia.

Further
details on agreements and conventions to which Iceland is a party
to can be found with the Icelandic Ministry for Fisheries and the
Icelandic Ministry for Foreign Affairs.

ROLE
OF THE PUBLIC AND THE PRIVATE SECTOR

The
public sector’s major role is in resource management, research,
education and training, and supervision of quality control systems.
The fish processing and harvesting industry is mostly privately owned
and liberalised. Local government may intervene however in the event
that a vessel may be sold to an individual from a different municipality.
The municipality has the right to offer to buy the vessel or to encourage
individuals from the same municipality to buy the vessel, before an
external person or organisation can buy it.

GOVERNMENT
FINANCIAL TRANSFERS

Public
transfers to the marine capture fisheries sector fisheries sector
in 2001 equated approximately US$ 39.1 million. The costs mainly covered
income tax deduction for fishermen and general services, such as the
Marine Research Institute and fisheries surveillance carried out by
the Coast Guard. The amount of financial transfers had risen by approximately
US$ 5.6 million since 2000, which went mostly to the Marine Research
Institute and the Directorate of Fisheries, which was meant for the
harvesting and processing sector.

SUPPLY
AND DEMAND PROJECTION

The
outlook for the Iceland fishing industry is considered positive. Catches
and exports are expected to remain stable and the economic performance
of the capture and processing industry are predicted to be good. The
aquaculture industry is anticipate to grow further, with charr production
possibly exceeding that of salmon.